South Dakota Government Blog by Bob Mercer

Monthly Archives: January 2012

Sen. Eldon Nygaard of Vermillion was elected as a Democrat in 2010 to succeed another Democratic senator from Vermillion, Ben Nesselhuf. But Democrats managed to capture just six of the 35 Senate seats that November. So Nygaard switched parties and joined the Republicans. While presiding this morning as vice chairman of the Senate committee on commerce and energy, he made an intriguing off-hand remark referring to another senator who would be explaining a bill in the Republican caucus. “That’s the advantage of having a rather large caucus,” he said. Nesselhuf, now the chairman/executive director for the South Dakota Democratic Party, likely has a big bullseye on the good senator in this year’s elections.

Those are the numbers of proposed constitutional amendments from each chamber of our Legislature this session. The question facing the House members is simple: “What part of ‘no’ don’t you understand?” Among the House joint resolutions are several retreads that voters have soundly defeated before, including David Lust trying again on corporations, Jim Bolin trying to increase the historic nickel first- and last-trip mileage rate for legislators, Bolin wanting to increase term limits for legislators to 12 years from the current eight per chamber, and Marc Feinstein revisiting four-year terms and longer term limits for legislators. Peggy Gibson also brought back the single-member House districts proposal. There was an unusual coalition of Democrats led by Patrick Kirschman and Tea Party-esque Republicans backing a constitutional amendment guaranteeing freedom of choice in medical services. (Both Gibson and Kirschman lost their proposals in committee.) Paul Dennert is trying to change the constitution so there’s no longer a guaranteed $12 million annual payout to the state general fund from the trust fund containing proceeds from sale of the stat cement plant. Also getting into the action is Gov. Dennis Daugaard, who wants a true balanced-budget amendment for state goverment. And there’s Hal Wick leading a list of conservative Republicans who want South Dakota to call for a federal constitution convention on a federal amendment that would require a federal balanced budget except in times of national emergencies. The House committee on state affairs is scheduled to take up the two budget-balancing resolutions on Wednesday morning (Feb. 1).

An interesting news release arrived this morning from Cathy Brechtelsbauer, who volunteers as the South Dakota coordinator of Bread for the World, an organization that focuses on helping feed the needy. She’s urging that the Legislature end South Dakota’s food-tax refund program. She explains why:

Sioux Falls — “The governor was right last year to ask for an end to the food tax refund program,” says Cathy Brechtelsbauer, coordinator for South Dakota’s Bread for the World group. “The legislature didn’t do it then, but they could end it now.” House Bill 1206 ends the program and directs the remaining appropriated funds to Feeding South Dakota, the state’s food bank serving pantries and other emergency feeding programs statewide. Brechtelsbauer says, “That would get more food to struggling households than the refunds do, as would a cut in the tax rate itself on food, even as small a cut as 1/4 percent.”

South Dakota’s Bread for the World group worries about the effects of the food tax but says now the refund program should be ended.

By any measure, the refund program has proved ineffective at returning food tax to people who need it. The enrollment period has ended for this fiscal year, so for the whole year the statewide enrollment is known: only 264 households. Meanwhile, a rough estimate is that about 100,000 households in the state are low-income. The total of the food tax returned is less than 1/10 of one percent of the total food tax South Dakotans pay (state+local). “You know there is more need in our state than that,” says Cathy Brechtelsbauer, coordinator for the group. “I talked to a mom last week who thought about the $100 she spent on food last month and said if she had the tax money she paid on that, she would buy a couple pounds of hamburger and make a couple more meals.” Over a year, the tax people pay (state + city) on their food could buy all their food for three weeks. [6% x 52 weeks].

The refund program is missing so many people for multiple reasons. People are embarrassed. People are trying to make it without help from the state. Many would prefer to be the helper rather than the helped. At this income level, workers often have fluctuating incomes, in and out of the qualifying range, making it hard to find them, get them signed up and keep them enrolled. In addition, they usually are hoping they will have a higher income shortly. They are often overwhelmed with multiple jobs, with poor health, with children’s needs, transportation issues, with various crises. Many others have physical impairments of age or disability or mental impairments, making them incapable of looking out for themselves in this way. Many people simply don’t know about the program or don’t think they qualify. Low-income people do not have financial advisors or other ways to find out about benefits, especially when they are not involved with other programs.

Senate Bill 101 flew out of the Senate’s committee on local government this morning. It would allow county governments to borrow money from any source willing to issue the promissory note. The legislation comes out of Beadle County. The prime sponsor is Sen. Tom Hansen, R-Huron, and so far he faces an easy road. Committee members placed the bill on the Senate consent calendar, meaning it won’t face any debate unless a senator objects. Township governments weren’t sure whether they wanted to be included, so they were friendly-amended out of the bill. If the bill gets through the Senate, the lead sponsor in the House is Rep. Mark Kirkeby, R-Rapid City.

The state Senate’s committee on taxation has scheduled the first hearing Monday on a very big matter for public school districts. Rural electric cooperatives want a change in how they are taxed. They don’t pay property taxes in the standard way. Instead they pay a tax on their gross receipts, and the money goes to school districts. The South Dakota Rural Electric Association’s legislation, Senate Bill 123, would eliminate the gross receipts tax and impose a mil levy on each kilowatt-hour of electricity sold. As proposed, it is designed to essentially break even. But co-ops’ gross receipts have been growing much faster than, on average, than have kilowatt-hours sold. What that means is co-ops would temper the growth in their taxes, while school districts would get a slower-growing stream of revenue. The legislation doesn’t suggest a replacement source of funding. The problem facing co-ops is their costs are rising as a result of stricter environmental regulations on coal-fired plans, as well as higher costs for building gas-fired peaking plants and for wind-generated electricity. Co-ops are designed to be break-even ventures, more or less, so they must raise prices to members in order to cover those higher costs. For school districts, the gross receipts revenue has been popular because its uses are generally unrestricted. The bill’s prime sponsor is Sen. Larry Rhode, R-Union Center. If SB 123 gets through the Senate, the lead sponsor in the House is Rep. Roger Solum, R-Watertown. The position of the Associated School Boards of South Dakota regarding the bill isn’t clear yet; ASBSD’s bill-tracker report shows a “monitor” designation rather than oppose or support.

The Manchurian Candidate is a good movie to keep in mind as you watch more of the Stace Nelson situation unfold. Many people in the Capitol don’t remember that all of this pre-dates Stace’s time in the Legislature (he was elected in 2010). We still don’t know who was paying the bills in 2007-2008, but someone wrote big checks to pay for the establishment of the South Dakota Conservative Action Council and brought in Lee Breard, a political operative from Louisiana, who took office space in the Olinger law office building at one of the most high-visibility intersections in the heart of Pierre at the corner of Capitol and Euclid, just blocks from the Capitol building itself. SDCAC was behind formation of a group called South Dakotans for Open and Clean Government. They put a measure on the 2008 ballot that attempted to restrict or even ban political contributions and lobbying. Similar measures were attempted in other states. We never could get to the bottom of who was paying for it or who was paying Breard. Breard had come to South Dakota to manage the campaign of Republican U.S. House candidate Bruce Whalen in 2006. From there he migrated to the SDCAC role. He got legislation passed under sponsorship of Rep. Hal Wick, R-Sioux Falls, in the 2008 session that would have forced a government-transparency website, but Gov. Mike Rounds vetoed it. Even so, the influence of Breard and Wick was strong enough to come within one aye of overriding Rounds’ veto. One of Breard’s organization’s directors was Lora Hubbel, who’s now a Republican state representative from Sioux Falls. She wouldn’t disclose the source or sources of the money. The third director was Steve Sibson of Mitchell, who’s vigorously defending Nelson on his blog today. He wouldn’t disclose their funding source, either. What was happening in 2008 was outside groups taking advantage of South Dakota’s ballot-measure laws. By creating a series of committees and organizations, they were able to hide from the public the roots of their funding. Another measure in 2008 came out of Missouri and Arizona that attempted to change financial securities laws in South Dakota. Heading that effort originally was Rep. Wick, who at the time said he didn’t know where the money for his measure was coming from. The headlines from a series of four stories I wrote back then, published in April/May of 2008 in the Aberdeen American News and several other daily newspapers I serve, summarize what was happening:

To better understand what’s currently happening, it’s worth digging out those nearly four-year-old stories. There are more connections than I can get into, without becoming (more) tedious. And a lot more has happened since those stories. The hard-right underground remains very active in South Dakota and has at least a half-d0zen to several dozen members of the Legislature. Whether they would describe themselves that way is unlikely, because it’s doubtful that many of them understand how they’re manipulated on a daily or near-daily basis during the legislative session. What’s not clear is whether some of these people have been duped into what they’re doing, without understanding the sources of the national money propping up their efforts, or if they are expressly their true thoughts as anti-government populists. Some of the people, who also include otherwise respected lobbyists and at least one statewide office holder, probably would be surprised to see how they have become woven into this same web. Nationally it’s been labeled as the Tea Party because there’s no good description for it. What’s happening in and around the Legislature goes beyond that label. A national agenda is being pressed upon South Dakota year after year, while identification and responses to our state’s real problems are too little addressed. There are clearly sincere efforts such as the decades-long drive to restrict or ban abortion and to defend legalized abortion. This goes far beyond that fundamental dispute.

Two fascinating looks inside the U.S. Supreme Court, these are. Scorpions, written by scholar Noah Feldman, tracks the inside stories of four justices appointed by FDR: Felix Frankfurter, Hugo Black, Robert Jackson and William O. Douglas. Through them Feldman tells what happened on some of the most important legal decisions in our nation’s history. Five Chiefs, written by retired Justice John Paul Stevens, is a memoir told through his commentary on the five men who served as chief justice during his time. Why recommend both? First, they’re both good. Scorpions is judiciously spicy and intellectually stimulating. Five Chiefs is spare yet tells as much about the writer as about the subjects. It also provides great explanations of the design and workings of the Supreme Court. Second, the two books together often offer differing vantage points about some of the same personalities and some of the same cases. One example is the Brown v. Board of Education decision. Feldman goes far beyond the standard tale to tell the story before, and the story behind, the story of that decision. In that respect Scorpions also shows how little we know about the court’s members arrive at their decisions, while Five Chiefs shows that such background can elude even a later member of the court such as Justice Stevens. My advice on reading Scorpions is that you start at the very front, then go to the back, which gives you a better idea of the intellectual arc you’re about to travel through much of the book with Feldman. For reading Five Justices, just get a cup of coffee and settle in, because Justice Stevens is a fine writer and an interesting observer of his fellow men.

Remember Jim Thompson? Yes, the radio and rodeo guy. He served in the state Senate, as a Republican from Watertown back then, for just shy of three years until his resignation on Dec. 31, 1997. He had ambitions politically, for a while, and left the Senate Republican caucus. He positioned himself as an independent and, rather than go to caucus each afternoon, held his own meetings in the Legislative Research Council’s library area. Sort of like what Rep. Lance Russell, R-Hot Springs, and Rep. Stace Nelson, R-Fulton, now plan to do after they were banned from caucus by House Republican leader David Lust. The Thompson show at the Capitol didn’t last long.

Of course, there was a Republican legislator from Sioux Falls who routinely skipped the daily caucus meetings and had a very different tale of political success. His name was Dave Munson. He was a good legislator, first in the House and later in the Senate. He served a mere 24 years. Term-limited in 2002, he went on that spring to be elected mayor of Sioux Falls. He later was re-elected to a second term in one of the all-time comeback surprises in South Dakota politics.

Dave turns 70 on April 16, and Jim is 65 on Sept. 19, in case you want to wish one or both a happy birthday.

If House Speaker Val Rausch was truly trying to move Rep. Stace Nelson away from other Republicans in the House of Representatives, as is now being stated in media accounts today, he didn’t move him far enough. Nelson took the desk previously held by Rep. Betty Olson, a Republican, while Olson moved into Nelson’s old desk next to Rep. Fred Romkema, a Republican. In Nelson’s new spot, he’s in an all-Republican row and he is six-sevenths surrounded by Republicans. He has Republicans Roger Hunt, Tad Perry and Steve Hickey at his right hand, Republican Don Kopp at his back, Republicans James Schaefer and Manny Steele at his left, and Democrat Larry Lucas riding on the left front fender.

It never hurts to have a good lawyer sitting at your elbow. The state Game, Fish and Parks Commission had one of the best for the past four years with Jim McMahon as a member. The former U.S. attorney for South Dakota had semi-retired in private practice in Sioux Falls. McMahon asked hard questions on the hard issues. He’s being replaced by Duane Sather of Sioux Falls, a businessman who’s been in trucking, candy and most recently construction of ethanol production plants. He also was involved in a hunting lodge. The appointment was announced this afternoon by Gov. Dennis Daugaard.